Task Force Suggests Scrapping CVT and Section 7E to Revive Real Estate Sector

The Task Force for the development of the housing sector has recommended abolishing Section 7E of the Income Tax Ordinance and Capital Value Tax (CVT) in Islamabad. Additionally, they propose reducing transaction taxes on the buying and selling of immovable properties.

According to sources, the Task Force has finalized its short-term, medium-term, and long-term recommendations for the Prime Minister, with the goal of stimulating investment in the real estate sector. Experts have cautioned that without a reduction in the current 12-13% transaction taxes, capital will continue to flow abroad, resulting in a further slowdown in property transactions.

Currently, real estate transactions have dropped below 50% following increased tax rates, with many deals now occurring through power of attorney to avoid heavy taxation. The Federation and provinces have been urged to collectively work towards tax reductions in the upcoming budget.

The Task Force’s final recommendations include waiving the requirement for a 7E declaration and commissioner approval, introducing exemptions for properties valued up to Rs 10 million, shifting non-resident verification to an online NADRA system, and ensuring a uniform tax rate for filers and late filers. Additionally, the Task Force has proposed revising property valuations every three years to align with market prices and introducing transaction tax exemptions for specific categories such as low-cost housing, government plots, and first-time homebuyers.

Short-term measures also include lowering the policy rate to a single digit, resuming the Mera Pakistan Mera Ghar (MPMG) Scheme, reintroducing mark-up subsidies for low-cost housing loans, and launching awareness campaigns to educate consumers.

Furthermore, the Task Force has suggested digitizing building and housing scheme approvals, incentivizing vertical development, and defining low- and middle-income housing in monetary terms for targeted implementation.

Officials stress that facilitating the construction and real estate sectors is crucial for economic stability and employment generation. The proposed tax reforms, if implemented, are expected to attract investment and revitalize the property market.